Posted
by
timothy
on Tuesday April 15, 2014 @12:07PM
from the rent-seeking-right-on-the-surface dept.

McGruber (1417641) writes "Return-free filing might allow tens of millions of Americans to file their taxes for free and in minutes. Under proposals authored by several federal lawmakers, it would be voluntary, using information the government already receives from banks and employers and that taxpayers could adjust. The concept has been endorsed by Presidents Obama and Reagan and is already a reality in some parts of Europe. Sounds great, except to Intuit, maker of Turbotax: last year, Intuit spent more than $2.6 million on lobbying, some of it to lobby on four bills related to the issue, federal lobbying records show."

In some cases, it can pay off. I ended up getting around ~$800 back from the feds this year and through a deal on Amazon, I got 10% bonus by getting the refund back in Amazon gift credit. That's a free 80 bucks, well better than any tiny interest rate I could have gotten in a savings account. When the interest rate you can get is higher than the rate of inflation, you might have a point...

It amazes me that people *still* give the government interest free loans. Getting money back via your tax return is bad. I strive to owe the government the maximum amount I can each year without penalty.

1) Especially right now, that money wouldn't earn much elsewhere, especially if you put it into a safe investment. If you just keep it in a bank account, for most people it's probably barely worth it. (The average refund is about $3000 in 2011, the date I happened to see. Put in an online savings account with 0.95% interest (the highest MMA/savings on bankrate.com) and you'd make a whopping $15.48 over the course of the year. I guess that'd buy one person a decent dinner or so.)

If this was in 2007 or something when you could get a 5% account, things would be different. (That'd be $387.)

(I guess that is the federal-only figure. Would be slightly higher with state refunds, though at least for me those have always been much less.)

2) Fewer things to worry about come tax time. There are penalties for under-withholding, at least in some conditions. Overwithholding a little protects you from these.

3) I am not even sure if it's legal to decrease my withholding, for example. I've claimed the exemption that the W-4 instruction allows, and I don't even know if it is legal for me to claim more, or if there is another way to reduce withholding. I've looked into it a little bit, but it's not worth my time to look into the various IRS pubs.

Well just another instance of Big Government and regulations equating to rent seeking & crony capitalism.

- Create Condition - convoluted tax code

- Fix condition you created with Government money- Federal paid assistance to file taxes

- Claim you're helping the little guy

- Profit!

Here is another example - Food Stamps (aka SNAP) and Agriculture policy. You might think food stamps exist to help the poor, but you'd be wrong. Food stamps are part of the AGRICULTURE spending bill, not the health and human services bill. The idea is to stimulate buying of "surplus" agricultural produce by subsidizing poor people who can't aford to buy it. But the dirty secret is that the agrculture policy of price supports both stimulates over-production for some crops and under-production for others while keeping prices high and making food LESS affordable for the poor. With food stamps the agribusinness interests can now sell the 'surplus' created by the price supports (government money) at artificially high prices to the poor (with government money), all the while with the political overhead cover of helping "family-farmers" and the "hungry children".